COMMISSIONER OF INCOME TAX JAIPUR Vs. R N JHANJI

JUDGEMENT

(1.) THIS is a reference under section 256 (1) of the Income-tax Act, 1961 at the instance of the Revenue to answer the following question of law, namely, "whether on the facts and in the circumstances of the case the Tribunal was right in law in holding that the assessee is entitled to relief u/s 91 (1) of the T. T. Act, 1961 on the full amount of tax deducted at sourse of Rs. 16, 413/- in the foreign country ?"

(2.) THE relevant assessment year is 1976-77. During the relevant period the assessee, a medical practitioner had received salary in Iran of Rs. 1,41,265/-on which the tax deducted at source in Iran was Rs. 16, 413/- THE assessee also earned the income of Rs. 5247/- in India during the same year. THE assessee claimed the deduction under section 80 RRA in respect of the remuneration received by him for services rendered outside India and also relief from double taxation under section 91 (1) of the Income-tax Act, 1961. THE Income-tax Officer held that the relief under section 91 (1) was allowable only of the amount of tax. paid on Rs. 70,632/- which was fifty percent of the remuneration received for services rendered outside India since the deduction under section 80 RRA was allowed to the same extent. THE Income-tax Officer took the view that fifty per cent of the foreign income which was deducted under section 80 RRA was not doubly taxed and, therefore, the remaining half only which had been included in the income for the purpose of tax in India was doubly taxed. Accordingly, it was only fifty percent of the foreign income which qualified for relief from double taxation under section 91 (1) of the Act.

(3.) NOW comes for consideration the disputed meaning of section 91 (1) which admittedly applies in the present case. This provision provides for relief from double taxation on that amount included in the income which has already been taxed in the foreign country. The question is what is, the amount which can be said to be doubly taxed in these circumstances? The expression requiring construction in section 91 (1) is such doubly taxed income'. The provision for relief from double taxation is that deduction would be given from the Indian Income-tax payable by the individual of 'a sum calculated on such doubly taxed income at the rate of tax specified. This means that after ascertaining the total Indian Income-tax payable on the total income determined under the provisions of the Income-tax Act, 1961, giving the deduction under section 80 RRA and all benefits permitted by other provisions of the Act, a deduction would be made therefrom of tax calculated at the specified rate on such doubly taxed income', on which tax has already been paid in the foreign country.